SMM Zinc Market Daily Review (2015-3-30)

SHANGHAI, Mar. 31 (SMM) – SHFE 1506 zinc contract prices opened at RMB 15,965/mt last Friday evening, then rose but met resistance at RMB 16,000/mt, and closed the day at RMB 15,985/mt, up RMB 10/mt or 0.06%. Trading volumes decreased 22,574 to 26,096 lots, and total positions were down 1,066 to 120,592. SHFE 1506 zinc contract prices opened at RMB 15,990/mt on Monday, then hovered around RMB 16,000/mt, and closed the day at RMB 15,965/mt, down RMB 10/mt or 0.06%. Trading volumes decreased 33,970 to 77,676 lots, and total positions increased 300 to 121,958. SHFE 1506 zinc contract prices are expected to fluctuate around RMB 16,000/mt this evening.

#0 zinc prices were between RMB 15,870-15,900/mt, RMB 80-50/mt below SHFE 1505 zinc contract prices and RMB 100-70/mt below SHFE 1506 zinc contract prices. #1 zinc was traded between RMB 15,750-15,780/mt. SHFE 1506 zinc contract prices hovered around RMB 15,980/mt after opening, and inched lower during 10:30-11:30 AM, but up RMB 40-50/mt from last Friday. Spot zinc price gains were stronger than SHFE zinc prices, with spot discounts narrowing RMB 30/mt. This is due to increased purchases by traders. Smelters were unwilling to sell, and traders reduced purchases. A few downstream buyers replenished stocks, with overall transactions unchanged. Shuangyan and Huize #0 zinc prices were RMB 15,890-15,900/mt, RMB 60/mt below SHFE 1505 zinc contract prices. Qinxin and Qilin #0 zinc prices were RMB 15,870-15,880/mt, with spot discounts of RMB 80-60/mt against SHFE 1505 zinc contract prices. SMC #0 zinc prices were RMB 15,830-15,850/mt, with spot discounts of RMB 120-110/mt against SHFE 1505 zinc contract prices. Indian #0 zinc prices were RMB 15,760-15,780/mt, with discounts of RMB 190-180/mt against SHFE 1505 zinc contract prices. SHFE 1506 zinc contract prices remained steady in the afternoon.

LME zinc prices hovered around the 60-day moving average last week. With regard to zinc price trends this week, SMM surveyed 30 market players to find that 33% are bullish toward zinc prices, believing LME zinc prices will rise to USD 2,110/mt, and SHFE 1506 zinc contract prices will test RMB 16,150/mt. HSBC’s March PMI hit an 11-month low, which will precipitate additional monetary stimulus measures. Infrastructure construction will also give hope to the market. In China’s spot markets, some market players ramped up purchasing due to market optimism, causing spot discounts to narrow to RMB 100/mt, which will also support spot zinc prices.

67% are neutral, seeing LME zinc prices fluctuate between USD 2,060-2,100/mt, and SHFE 1506 zinc contract prices moving between RMB 15,800-16,100/mt. SHFE 1506 zinc contract prices failed to break through the 60-day moving average. Spot consumption remains weak. When combined with the lack of speculative fund, zinc prices should hover in a narrow range.